New Zealand’s Willis Wants RBNZ to Add Summer Rate Decision

Nicola Willis, New Zealand's finance minister, during an interview in Sydney, Australia, on Friday, Feb. 23, 2024. Willis has cast doubt on her ability to return the budget to surplus by 2027, saying the weakening economy is likely to impact on tax revenue. Photo by Brent Lewin /Bloomberg

Article content

(Bloomberg) — New Zealand Finance Minister Nicola Willis wants the central bank to increase the frequency of its rate decisions, ending its practice of a three-month summer break and bringing it in line with global peers.

Article content

“I’m particularly concerned about the 12-week break over summer, which is a long time to go between meetings,” Willis told Bloomberg News in a statement. “The central banks of England, Canada, Australia and the United States have shorter breaks and meet more frequently. I think the Reserve Bank should return to meeting eight times a year.”

Article content

Article content

Article content

The RBNZ has yet to respond to a request for comment. It has previously said the Monetary Policy Committee has the ability to hold unscheduled meetings if necessary. 

Article content

Article content

The committee holds seven meetings a year to decide on the level of the Official Cash Rate, one fewer than policymakers at the Bank of England, the Bank of Canada, the Reserve Bank of Australia and the US Federal Reserve. Since 2016 the RBNZ has had an unusually long break between November and February, effectively skipping a decision. 

Article content

Willis sought advice from the Treasury Department on the frequency of the RBNZ’s rate decisions, which has been released to Bloomberg under the Official Information Act.

Article content

Treasury told Willis that the RBNZ’s summer break is longer than comparator central banks, and that “more frequent decisions would allow the Bank to respond to changes in the economy.” 

Article content

“We consider that you could appropriately raise the issue of meeting frequency with the Bank for consideration,” the Treasury advice says. “You could in the first instance raise concerns with the Bank’s leadership — the Treasury could support you in that engagement. A more significant step would be to ask the Bank to provide policy advice on the matter.”

Article content

Willis told Bloomberg that “ultimately, the decision about how often the Monetary Policy Committee meets is a matter for the Reserve Bank.”

Article content

“But my view is that the committee should meet more often,” she said. “That’s why I sought advice from the Treasury about the frequency of meetings.”

Article content

In its advice, Treasury says it understands the MPC “intends to discuss internally at some stage” the issue of meeting frequency.

Article content

Bloomberg asked the RBNZ for any recent correspondence or documents concerning meeting frequency, but the bank has extended the time-frame for its response.

Article content